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Economy
Economist: Don't Listen to Hegseth, Trump's Iran War Will Cost 'Very Possibly Trillions'
"War is hell. And hell comes with a hefty price tag," said University of Michigan professor Justin Wolfers.
May 08, 2026
University of Michigan professor Justin Wolfers on Friday joined a growing number of economists and other critics casting down on what he called "the Pentagon's lowball $25 billion estimate" for the cost of President Donald Trump's illegal war on Iran.
While testifying before Congress last week alongside US Secretary of Defense Pete Hegseth, Pentagon comptroller Jules "Jay" Hurst offered the $25 billion figure. However, experts have responded with raised eyebrows. Stephen Semler, a senior fellow at the Center for International Policy, estimated that the government spent at least $71.8 billion during the first two months of the war, or around $1.2 billion each day.
Although Trump told Congress last Friday—a key deadline under the War Powers Act—that his assault on Iran had been "terminated," citing the ceasefire deal reached a month ago after his genocidal threat, the administration has maintained its naval blockade and on Thursday bombed what it claimed were "Iranian military facilities responsible for attacking US forces."
The cost isn't just measured in billions of taxpayer dollars spent on a war that doesn't make us safer. It's measured in economic losses such as high prices working families see at the gas pump. The human toll can't be ignored. www.nytimes.com/2026/05/08/o...
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— Randi Weingarten 🖇️📚✊🇺🇸 (@rweingarten.bsky.social) May 8, 2026 at 2:41 PM
As the threat of more US bombings of Iran loomed, Wolfers wrote Friday in a New York Times opinion piece that "the Pentagon's stated number reflects only a narrow accounting of the tab that Operation Epic Fury is running up. It's the price of the more than 2,000 Tomahawk and Patriot missiles already fired, the warplanes already flown and in some cases lost, and the rest of the gear already chewed through. It does not measure the true cost of the war—including the human toll."
"Since the start of the war, oil markets have been disrupted, consumer confidence has cratered, the global economy is groaning, and military budgets are growing," the economist continued. "The toll from this upheaval must be counted in lives disrupted, jobs lost, companies shut down (see: Spirit Airlines), and the income and output sacrificed. The less easily quantified costs—death, disability, and mental health—could become much more dramatic should President Trump send troops into Iran, which still can't be ruled out."
As David Dayen, executive editor of The American Prospect, detailed Friday, the war seemingly hasn't achieved any of Trump and Israeli Prime Minister Benjamin Netanyahu's shifting objectives:
The US and Israel said they wanted to eradicate Iran's nuclear program and change its regime. The regime is now composed of more hard-liners than before, and Iran's nuclear capability has not budged since last summer. Now the two sides are negotiating the opening of the Strait of Hormuz, which was open before the conflict, and the terms of Iran's nuclear program, which they were negotiating before the conflict. Moreover, the compromise being contemplated involves Iran pausing uranium enrichment in exchange for the US lifting sanctions and unfreezing Iranian funds. That sounds suspiciously like the deal President Obama struck in 2015 that Trump ripped up when he took office, complete with the "bags of cash" sent to Iran that Trump flipped out over back then.
All this war has done is killed thousands of people, opened a new front for Israel in Lebanon, damaged most US military sites and most energy production facilities in the region, led to oil spills that are visible from space, created a shipping bottleneck that will take at least a year to fix, raised domestic gas prices to a record for this time of year, cost American consumers $34.3 billion and counting, ended the life of one US airline with more likely to come, and led us down an imminent path to physical shortages of critical commodities like oil, including in the United States.
I have never in my life seen a war that achieved literally none of its objectives while directly causing this many devastating costs, and I lived through Iraq and Afghanistan.
The Washington Post reported Thursday that the Central Intelligence Agency has privately warned the Trump administration that "Iran can survive the US naval blockade for at least three to four months before facing more severe economic hardship," and its "analysis might even be underestimating Iran's economic resilience if Tehran is able to smuggle oil via overland routes."
The reporting heightened concerns about how long the war may drag on. The International Monetary Fund warned last month that a prolonged conflict could cause a global recession.
Already, the war has "pushed the Federal Reserve Bank into a corner," and "Wall Street is worried, despite the market touching new highs," Wolfers wrote Friday. "My estimate—based on the movement of oil prices, along with the S&P 500—is that stocks are about 5% lower than they otherwise would be, suggesting that the war has wiped about $3 trillion off the value of these companies."
The economist also cited recent research showing that elevated "geopolitical risk leads to lower investment and employment."
Shortly after launching the war in February, the White House signaled it would need $200 billion for the operation. However, it is now seeking a $1.5 trillion defense budget for the next fiscal year—which Hegseth tried to frame as a fiscally responsible plan that puts "the American taxpayer first" in a widely ridiculed video this week. Wolfers highlighted that the budget request is "a roughly 40% boost over this year. That's a massive $600 billion increase, or roughly $4,000 per household."
Like Dayen, Wolfers also pointed to the Iraq War, which economists Linda Bilmes and Joseph Stiglitz estimated cost the US around $3 trillion, after factoring in expenses such as "lifetime medical care and disability benefits for veterans, and the higher recruitment and retention costs that follow a bloody war—all compounded by a rising interest bill."
"The best any economist can do right now is get the order of magnitude right, and my math suggests the Iran war will cost hundreds of billions of dollars, and very possibly trillions," Wolfers concluded. "War is hell. And hell comes with a hefty price tag."
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California Gov. Hopeful Steyer Proposes Fund to Guarantee Jobs for Workers Displaced by AI
"Most politicians still fail to recognize or downplay the threat of AI to workers, at the behest of Silicon Valley," said one veteran labor organizer.
May 08, 2026
In a first for a statewide candidate, California gubernatorial contender Tom Steyer on Friday proposed the creation of a wealth fund that would be paid into by artificial intelligence companies, with the money being used to fund jobs in key sectors of the economy.
The billionaire hedge fund founder-turned-environmental advocate, who has come out in support of a proposed tax on billioionaires' wealth and a single-payer healthcare system for the state and has described himself as a "class traitor," told Wired about his proposal to use a "token tax" to fund what he called the Golden State Sovereign Wealth Fund.
Big Tech companies would be taxed “a fraction of a cent for every unit of data processed” for AI uses, and some of the money directed to the fund through the taxation plan would be earmarked for jobs for people who lost employment due to the expansion of AI.
Jobs in healthcare, housing construction, and modernizing the state's energy infrastructure would be prioritized in the fund.
Steyer told Wired the plan would make California "the first major economy in the world" to guarantee jobs to people who have been displaced by AI.
“People all over this state are terrified that AI is going to hollow out this whole economy and they’re going to lose their jobs. Young people are worried they’ll never get a job,” Steyer told Wired. “We believe this can be an amazing transformational technology in many ways, but we’re not in the business of leaving people in California behind.”
The outplacement firm Challenger, Gray, and Christmas released a report Thursday showing that for the second straight month, AI was the leading reason companies cited for laying off workers. AI-related job cuts accounted for 26% of the 88,387 layoffs the firm recorded, with 21,490 people losing their jobs due to AI.
“Technology companies continue to announce large-scale cuts and are leading all industries in layoff announcements. They are also often citing AI spend and innovation. Regardless of whether individual jobs are being replaced by AI, the money for those roles is,” said Andy Challenger, chief revenue officer for Challenger, Gray, and Christmas.
Last October, Sen. Bernie Sanders (I-Vt.) released an analysis showing that AI and automation could eliminate nearly 100 million jobs in a decade—yet President Donald Trump and the Republican Party are aggressively pushing to stop states from regulating the industry.
Trump signed an executive order late last year calling on the Department of Justice to create an AI Litigation Task Force, which would target laws and proposals to require studies on the impact of AI on jobs, protect people from AI companion chatbots, and regulate the technology in other ways.
“Not regulating AI doesn’t seem remotely reasonable,” Steyer said Friday.
At a debate earlier this week, Steyer said AI cannot be allowed to "create 12 trillionaires and millions of people who lose their jobs."
"The number-one thing that we have to do is make sure AI is a tool for workers and not a replacement of workers," he said. "And we absolutely need to own part of it."
We can't let AI create 12 trillionaires and millions of people who lose their jobs. The people of California need to share in the wealth AI creates. pic.twitter.com/ts2Ru1J5IX
— Tom Steyer (@TomSteyer) May 6, 2026
Charles Idelson, former communications director for National Nurses United, applauded Steyer for "addressing a growing danger for California's working class."
"Most politicians still fail to recognize or downplay the threat of AI to workers, at the behest of Silicon Valley," said Idelson.
Steyer said in a memo that in addition to protecting Californians from job loss, the fund created by the token tax would "strengthen the foundation of the state’s economy, invest in our communities, and create beautiful, vibrant public spaces."
“To support these efforts," said the campaign, "Tom will also invest heavily in training and apprenticeship programs across the state.”
Steyer's plan for AI also includes an expansion of unemployment insurance and the creation of the AI Worker Protection Administration that would adopt new rules to protect workers' rights as AI continues to develop.
Devin Murphy, director for digital mobilization for Steyer's campaign, said the state faces a "defining question" after its tech industry helped build the AI economy: "Who benefits from it?"
"Tom Steyer is putting forward one of the first serious plans to ensure AI strengthens the middle class," said Murphy, "instead of hollowing it out."
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Maryland Residents to Pay $1.6 Billion More in Power Bills Due to Out-of-State Data Centers: Complaint
"Maryland customers have neither caused the need for these billions in new transmission projects, nor will they meaningfully benefit from them," said Maryland People’s Counsel David S. Lapp.
May 08, 2026
A top state utilities regulator is calling foul on an effort to shift the power cost of out-of-state artificial intelligence data centers onto Maryland residents.
Maryland's Office of People's Counsel on Thursday filed a complaint with the Federal Energy Regulatory Commission (FERC) against electric grid operator PJM Interconnection objecting to plans that it said would force residents in the state to pay $1.6 billion in data center-driven transmission costs over the next decade.
The complaint states that the transmission cost allocation methodology PJM is using "broadly socializes" the cost of increased power demands that is being driven by AI data centers.
"That result is unjust and unreasonable and violates the cost causation principles that have long governed transmission cost allocation and that this commission has repeatedly affirmed," the complaint says. "PJM’s tariff imposes these costs on Maryland electric customers even though Maryland customers do not meaningfully cause nor benefit from those investments."
The Office of People's Counsel pointed to the massive number of data centers built in neighboring Virginia as a primary culprit for added strain on the electric grid.
"Amidst national data center growth, Virginia stands as the epicenter," the complaint says. "Virginia is the largest data center market in the world... As of December 2024, data centers represented 3.6 GW of demand... reflecting, since 2013, a 660% increase in megawatt-hour consumption."
This explosive growth in energy demand is only expected to intensify over the next several years, the complaint continues, noting that "PJM projects 32 GW of peak load growth across its territory by 2030, of which approximately 30 GW is attributable to data centers."
As a remedy, the complaint asks FERC to "require PJM to take immediate action to assign data center-driven transmission costs to the PJM zones where the data center customers are located" instead of shifting the cost to Marylanders.
Commenting on his office's complaint, Maryland People’s Counsel David S. Lapp said that the attempt to saddle Maryland consumers with a $1.6 billion bill for facilities outside the state's borders shows "PJM’s cost allocation rules are broken."
"Maryland customers have neither caused the need for these billions in new transmission projects," Lapp added, "nor will they meaningfully benefit from them."
Data centers have become political lightning rods in recent months, as residents from across the country object to their mass resource consumption, which is leading to a major spike in utilities bills, as well as the noise pollution they generate.
As CNBC reported earlier this year, PJM currently projects that it will be a 6 GW short of its reliability requirements in 2027 thanks to the added demand from data centers.
Sen. Bernie Sanders (I-Vt.) and Rep. Alexandria Ocasio-Cortez (D-NY) earlier this year introduced a bill that would impose a nationwide moratorium on AI data center construction “until strong national safeguards are in place to protect workers, consumers, and communities, defend privacy and civil rights, and ensure these technologies do not harm our environment.”
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‘Yeah, So What?’ Elites Shrug Off Working-Class Pain Caused by Trump Tariffs, Iran War
"Does anyone really care if the Strait of Hormuz is open?" asked one banking executive.
May 08, 2026
Even as President Donald Trump's illegal war with Iran and tariffs on foreign goods are hammering working-class Americans, a new report shows that members of the US elite have never had it better.
As The Financial Times reported on Thursday, attendees at the annual Milken Institute conference in Beverly Hills this week were living in "blissful ignorance" of the economic pain hitting workers in the US and around the world.
“People are glossing over the war with Iran,” an anonymous private credit firm executive told The Financial Times. “They've become desensitized to it. For some reason, people are saying, ‘Yeah, so what?'"
The Financial Times also quoted one person described as a "high-powered banker" who asked, "Does anyone really care if the Strait of Hormuz is open?"
Ted Koenig, chief executive of Monroe Capital, told The Financial Times that, while people at the conference were vaguely aware of the suffering of middle-class and working-class Americans, "at the end of the day, everyone’s focused on their own investment portfolios, especially here."
While the mood at the Milken conference may have been buoyant thanks to the record-setting stock market, fresh data released Friday showed Main Street America is feeling the exact opposite.
The University of Michigan's latest Surveys of Consumers found that consumer sentiment has hit another all-time low, driven in large part by anxiety over price increases caused by the Iran war.
"Taken together, consumers continue to feel buffeted by cost pressures, led by soaring prices at the pump," explained Joanne Hsu, director of the Surveys of Consumers. "Middle East developments are unlikely to meaningfully boost sentiment until supply disruptions have been fully resolved and energy prices fall."
Tahra Hoops, director of economic analysis at Chamber of Progress, noted 30% of respondents in the latest Surveys of Consumers said that Trump's tariffs were driving up their expenses.
"It would do well for Dems to continue to shout that gas prices are high and tariffs are raising your costs!" Hoops wrote.
While consumer spending has for months held up in the wake of low confidence, McDonald's CEO Chris Kempczinski said this week that signs of real strain are starting to appear.
As CNBC reported Thursday, Kempczinski described the current economic environment as "challenging," and warned that "it’s certainly not improving, and it may be getting a little bit worse."
The fast food CEO pointed to high gas prices as a particular strain on working-class consumers, who are the most regular customers at McDonald's.
“Clearly, when you have elevated gas prices, which is the core issue that I think we’re all seeing about in the press right now, gas prices, inflation on that, that is going to disproportionately impact low-income consumers,” Kempczinski said. “And so we expect the pressures there are going to continue.”
Kempczinski wasn't the only CEO to sound alarms about US consumer spending this week.
According to a Thursday report from Market Watch, Whirlpool CEO Marc Bitzer said during a quarterly earnings call that the appliance industry had seen a 7.4% drop in demand in the first quarter of 2026.
"This level of industry decline is similar to what we have observed during the global financial crisis," said Bitzer, "and even higher than during other recessionary periods."
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